Project Details
Project
ICO Social Bond Framework Second-Party Opinion
Client
Instituto de Crédito Oficial
Project Type
Social Bond/Loan
Industry Group
-
Use of Proceeds
-
Location
Spain
Evaluation Date
Mar 2020
Evaluation Summary
Sustainalytics is of the opinion that the ICO Social Bond Framework is credible and impactful, and aligns with the four core components of the Social Bond Principles 2018. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds – (i) Small, Medium and Micro Enterprises Lending, (ii) Socioeconomic Advancement and Empowerment, (iii) Social Housing, (iv) Access to Essential Services, and (v) Affordable Basic Infrastructures – are aligned with those recognized by the Social Bond Principles. Sustainalytics considers that the eligible categories will contribute to employment generation and provide social benefits in Spain while advancing the UN Sustainable Development Goals, specifically SDG 8, 9 and 10.
PROJECT EVALUATION/SELECTION
Potential expenditures are initially screened by the Loan Portfolio Management Area before being evaluated and selected by the team responsible for Sustainable Finance, which consists of representatives from the Divisions of Capital Markets, Strategy, International Financing, SME Intermediation Loans, Corporate and Institutional Investment, Risk, Human Resources and CSR, and Axis, the venture capital firm within ICO. Sustainalytics considers the project evaluation and selection process aligned with market practice.
MANAGEMENT OF PROCEEDS
Net proceeds will be placed in the treasury and tracked via internal tracking systems by the Treasury department. Pending allocation, unallocated proceeds will be held in cash, cash equivalent or money market products. The team responsible for Sustainable Finance will regularly evaluate the eligibility of potential loans and allocate the proceeds accordingly. This process is in line with market practice.
REPORTING
ICO intends to report the allocation of proceeds in its website on an annual basis until full allocation. ICO will report on the total amount of allocated proceeds along with details of each sector, locations of the loans provided to SMEs, each category for the direct lending, the total amount of the unallocated proceeds and the share of financing and refinancing. Additionally, ICO commits to report relevant social impact metrics. Sustainalytics views ICO’s allocation and impact reporting as aligned with current market practice.